‘They almost built a statue, you know?’
Councillors in Hamilton’s old city wards get a special tax fund to spend on infrastructure – but how it’s been used has come under fire. And with the recent redrawing of ward boundaries, get ready for an ‘awkward’ conversation about who will be getting wh
a political slush fund. Others call it a valuable weapon in the battle against ravaged roads and sidewalks in the old city of Hamilton.
In Wards 1 and 2, it is celebrated as a rare example of direct democracy.
The area rating special capital reinvestment reserve has a boring official name, but a colourful history.
The pot of cash was created to fund old city infrastructure repairs, but has famously — or infamously — been used for everything from the expropriation of a crime-ridden hotel to funding for school breakfast programs to the repair of a privately owned theatre.
It nearly paid for a $200,000 statue to controversial punk rock hero Frankie Venom before public outrage squashed the idea.
Area rating infrastructure spending spurs regular public debate because each old city councillor has wide latitude in how to use nearly $1.7 million per year. That includes total discretion over a littleknown $100,000 budget The Spectator reported on Saturday.
But a new debate looms over the fate of the infrastructure kitty thanks to growing public scrutiny, the upcoming fall election and dramatic ward boundary changes that affect where the contentious cash can be legally spent.
What is the area rating fund?
was created in 2011 out of a council compromise meant to even out tax rates across the evolving post-amalgamation city.
The short summary of a long debate: Suburban wards started paying more taxes for some services, but Wards 1 through 8 were not given a corresponding tax cut. Instead, the extra taxpayer cash goes into an annual reserve dedicated exclusively to infrastructure within the old City of Hamilton.
Right now, that adds up to $13.4 million a year, with each councillor able to spend up to $1.7 million annually. Since 2011, they’ve spent a combined $68 million.
Large-scale discretionary spending by elected city officials has to be “handled carefully to avoid the perception of conflict of interest,” said Richard Leblanc, a York University associate professor specializing in governance and ethics.
“You want to be transparent and to have strong back-end accountability,” said Leblanc, who told The Spectator he would ask for periodic internal audits of discretionary spending if he lived in Hamilton.
Discretionary councillor spending is not unheard of in other cities.
Until recently, councillors in Sudbury controlled spending of up to $50,000 per ward meant for infrastructure and com-
munity grants. But council returned control over the cash to bureaucrats in 2016 following public criticism and an auditor general’s review.
Some critics have also complained about the amount of control wielded by Toronto city councillors over cash collected via Section 37 “community benefits” agreements with developers whose projects don’t meet zoning rules.
In Hamilton, council must publicly vote on virtually all proposed area rating spending — but it is almost unheard of for councillors to vote against each others’ ward projects.
Most councillors choose funded projects themselves with varying levels of consultation with city staff and residents. In Wards 1 and 2, however, residents get to vote on the projects via a unique “participatory budget” process.
The amount spent in any one ward can vary dramatically, in part because councillors sometimes bank infrastructure cash for special projects like buying a closing school property, for example.
For example, the latest reserve data show Ward 4 Coun. Sam Merulla has spent $10.2 million over seven years — while councillors in Ward 7, previously Scott Duvall and now Donna Skelly, have spent a combined $5.6 million in approved projects.
Ahead of the fall election, some local residents are calling for an end to the largely councillor-directed spending — or at least a crackdown on a famously broad definition of “infrastructure.”
“Councillors should not be deciding on a whim where to spend this money,” argued resident and council critic Gabriel Nicholson in a recent letter to council.
Nicholson — who has also asked in the past for a program audit — argued spending on consultants, charitable grants, school-owned playgrounds and a theatre facade fall outside the stated infrastructure priority of the special tax levy.
“We need to address a growing ($3 billion) infrastructure deficit that will never end. It’s time to end this program until an alternative can be devised.”
But councillors say the special levy is doing its job. In 2017, for example, close to $9 million in area rating cash was approved for roads, sidewalks and related repairs, with hundreds of thousands more going to park and facility projects.
A majority of residential street “shave-and-paves” on the Mountain or in the lower city are funded through area rating cash, added engineering director Gary Moore.
But it is also true that hundreds of thousands of dollars, if not millions, have been spent on projects that stretch the definition of public infrastructure repair.
Brian McHattie, former Ward 1 councillor, is often credited with first using the term “social infrastructure” to justify the use of area rating cash for laudable but less-than-concrete projects like breakfast programs, for example.